Consumer Housing Sentiment Down Year over Year for First Time Since 2023

Rhea-AI Summary

Fannie Mae's Home Purchase Sentiment Index (HPSI) declined 1.8 points to 71.6 in February 2025, marking its first year-over-year decrease (-1.2 points) in nearly two years. The decline was primarily driven by growing consumer pessimism about mortgage rates, with only 30% expecting rates to decrease in the next year.

While the share of consumers viewing it as a good time to buy slightly increased to 24%, the majority (76%) still consider it a bad time. The percentage seeing it as a good time to sell dropped to 62%. The survey revealed decreased optimism in personal finances, with more respondents concerned about job security and household income.

Key metrics show: home price expectations declined with 41% expecting increases; mortgage rate pessimism grew with 33% expecting increases; job loss concerns rose to 23% of respondents; and household income confidence weakened with 11% reporting significantly lower income compared to last year.

Positive

• Slight increase in 'good time to buy' sentiment (24% vs 22%)
• 62% still consider it a good time to sell
• 41% expect home prices to increase
• 77% not concerned about job loss

Negative

• First year-over-year HPSI decline in nearly two years (-1.2 points)
• Growing pessimism about mortgage rates (only 30% expect decrease)
• 76% consider it a bad time to buy homes
• Declining consumer confidence in personal financial situations
• Increased job loss concerns (23% worried vs 22% previous month)
• Higher share reporting significantly lower household income (11% vs 9%)

Pessimism Toward Mortgage Rates and Personal Financial Situations Grows

WASHINGTON, March 7, 2025 /PRNewswire/ -- The Fannie Mae (OTCQB: FNMA) Home Purchase Sentiment Index^® (HPSI) decreased 1.8 points in February to 71.6, driven largely by consumers' increased pessimism that mortgage rates will go down in the next year. The share of consumers who say it is a good time to buy a home inched up last month to 24%, while the share who say it is a good time to sell dipped to 62%. February also saw a notable decline in consumers' optimism toward their personal financial situation, including household income and concern they could lose their job. Year over year, the HPSI is down 1.2 points.

"In February, the HPSI saw its first year-over-year decline in nearly two years, which was mostly due to a shrinking share of consumers expressing optimism about the direction of mortgage rates," said Mark Palim, Fannie Mae Senior Vice President and Chief Economist. "This growing pessimism makes sense, as mortgage rates had remained near the 7% threshold for a few months, including when we fielded this survey. The decline in sentiment was further impacted by consumers' growing concerns about their own personal financial situations. While some consumers may be slowly acclimating to the higher mortgage rate environment, the vast majority continue to believe it is a 'bad time' to buy a home – with high home prices cited as the primary sticking point. We continue to expect home sales activity to remain relatively light over our forecast horizon due to the ongoing lack of supply and overall unaffordability."

Home Purchase Sentiment Index – Component Highlights

Fannie Mae's Home Purchase Sentiment Index (HPSI) decreased 1.8 points in February to 71.6. The HPSI is down 1.2 points compared to the same time last year. Read the full research report for additional information.

• Good/Bad Time to Buy: The percentage of respondents who say it is a good time to buy a home increased from 22% to 24%, and the percentage who say it is a bad time to buy decreased from 78% to 76%. The net share of those who say it is a good time to buy increased 2 percentage points month over month to negative 53%.
• Good/Bad Time to Sell: The percentage of respondents who say it is a good time to sell a home decreased from 63% to 62%, and the percentage who say it's a bad time to sell increased from 36% to 37%. The net share of those who say it is a good time to sell decreased 3 percentage points month over month to 25%.
• Home Price Expectations: The percentage of respondents who say home prices will go up in the next 12 months decreased from 43% to 41%, while the percentage who say home prices will go down increased from 22% to 23%. The share who think home prices will stay the same increased from 34% to 35%. As a result, the net share of those who say home prices will go up in the next 12 months decreased 2 percentage points month over month to 18%.
• Mortgage Rate Expectations: The percentage of respondents who say mortgage rates will go down in the next 12 months decreased from 35% to 30%, while the percentage who expect mortgage rates to go up increased from 32% to 33%. The share who think mortgage rates will stay the same increased from 33% to 36%. As a result, the net share of those who say mortgage rates will go down over the next 12 months decreased 6 percentage points month over month to negative 3%.
• Job Loss Concern: The percentage of employed respondents who say they are not concerned about losing their job in the next 12 months decreased from 78% to 77%, while the percentage who say they are concerned increased from 22% to 23%. As a result, the net share of those who say they are not concerned about losing their job decreased 1 percentage point month over month to 55%.
• Household Income: The percentage of respondents who say their household income is significantly higher than it was 12 months ago increased from 17% to 18%, while the percentage who say their household income is significantly lower increased from 9% to 11%. The percentage who say their household income is about the same decreased from 73% to 70%. As a result, the net share of those who say their household income is significantly higher than it was 12 months ago decreased 1 percentage point month over month to 7%.

About Fannie Mae's Home Purchase Sentiment Index
The Home Purchase Sentiment Index^® (HPSI) distills information about consumers' home purchase sentiment from Fannie Mae's National Housing Survey^® (NHS) into a single number. The HPSI reflects consumers' current views and forward-looking expectations of housing market conditions and complements existing data sources to inform housing-related analysis and decision-making. The HPSI is constructed from answers to six NHS questions that solicit consumers' evaluations of housing market conditions and address topics that are related to their home purchase decisions. The questions ask consumers whether they think that it is a good or bad time to buy or to sell a house, what direction they expect home prices and mortgage interest rates to move, how concerned they are about losing their jobs, and whether their incomes are higher or lower than they were a year earlier.

About Fannie Mae's National Housing Survey
The National Housing Survey (NHS) is a monthly attitudinal survey, launched in 2010, which polls a representative sample of adult household financial decision makers in the United States, to assess their attitudes toward owning and renting a home, purchase and rental prices, household finances, and overall confidence in the economy. Each respondent is asked more than 100 questions, making the NHS one of the most detailed longitudinal surveys of its kind to track attitudinal shifts, six of which are used to construct the HPSI (findings are compared with the same survey conducted monthly beginning June 2010). For more information, please see the Technical Notes.

Fannie Mae conducts this survey and shares monthly and quarterly results so that we may help industry partners and market participants target our collective efforts to support the housing market. The February 2025 National Housing Survey was conducted between February 1, 2025, and February 18, 2025. Most of the data collection occurred during the first two weeks of this period. The latest NHS was fielded through AmeriSpeak^®, NORC at the University of Chicago's probability-based panel, in coordination with Fannie Mae and PSB Insights. Calculations are made using unrounded and weighted respondent-level data to help ensure precision in NHS results from wave to wave. As a result, minor differences in calculated data (summarized results, net calculations, etc.) of up to 1 percentage point may occur due to rounding.

Detailed HPSI & NHS Findings
For detailed findings from the Home Purchase Sentiment Index and National Housing Survey, as well as a brief HPSI overview and detailed white paper, technical notes on the NHS methodology, and questions asked of respondents associated with each monthly indicator, please visit the Surveys page on fanniemae.com. Also available on the site are in-depth special topic studies, which provide a detailed assessment of combined data results from three monthly studies of NHS results.

To receive e-mail updates with other housing market research from Fannie Mae's Economic and Strategic Research Group, please click here.

About the ESR Group
Fannie Mae's Economic and Strategic Research Group, led by Chief Economist Mark Palim, studies current data, analyzes historical and emerging trends, and conducts surveys of consumer and mortgage lender groups to provide forecasts and analyses on the economy, housing, and mortgage markets.

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Opinions, analyses, estimates, forecasts, beliefs, and other views of Fannie Mae's Economic & Strategic Research (ESR) Group or survey respondents included in these materials should not be construed as indicating Fannie Mae's business prospects or expected results, are based on a number of assumptions, and are subject to change without notice. How this information affects Fannie Mae will depend on many factors. Although the ESR Group bases its opinions, analyses, estimates, forecasts, beliefs, and other views on information it considers reliable, it does not guarantee that the information provided in these materials is accurate, current, or suitable for any particular purpose. Changes in the assumptions or the information underlying these views could produce materially different results. The analyses, opinions, estimates, forecasts, beliefs, and other views published by the ESR Group represent the views of that group or survey respondents as of the date indicated and do not necessarily represent the views of Fannie Mae or its management.

 

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SOURCE Fannie Mae

FAQ

What caused the FNMA Home Purchase Sentiment Index to decline in February 2025?

The HPSI declined 1.8 points due to increased consumer pessimism about mortgage rates and growing concerns about personal financial situations.

How many consumers believe it's a good time to buy a home according to FNMA's February 2025 survey?

24% of consumers say it's a good time to buy a home, while 76% believe it's a bad time.

What are consumers' expectations for FNMA mortgage rates in the next 12 months?

30% expect rates to decrease, 33% expect rates to increase, and 36% believe rates will stay the same.

How has consumer sentiment about home prices changed in FNMA's February survey?

41% expect home prices to increase, 23% expect decreases, and 35% predict prices will remain stable.

What percentage of FNMA survey respondents are concerned about job loss in the next 12 months?

23% of employed respondents expressed concern about losing their job, up from 22% in the previous month.